Print/Mail Consultants

Case Study

Merge Document Operations?

CORPORATE

Holding Company Contemplates Consolidation

Our client, a multi-national holding company, was considering the value of combining print and mail operations of geographically dispersed sites. They wanted to know about economies of scale they might achieve by consolidating all their document management activities.

Print/Mail Consultants (PMC) was engaged to evaluate the pros and cons of such an undertaking.

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We started by learning about each of the sites. We gathered document samples, envelopes, and inserts. Each of the corporate entities completed extensive questionnaires providing information about current and projected print volumes, schedules, paperless adoption rates, etc.

PMC asked about the vendors that were doing the actual printing and mailing. Each of the entities used a different print/mail service provider. We wanted to know about vendor strengths and weaknesses, which services they offered, and how they handled payment processing for the bills they generated for our client.

Included in our research were questions about errors, delays, or regulatory infractions the companies experienced in the past. We asked about customer complaints or cancellations related to customer communications.

We also gathered information about vendor services fees, costs for materials, and postage rates the entities were paying in the United States and Canada.

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After reviewing the completed questionnaires we scheduled follow-up calls with representatives of each of the entities. We clarified questionnaire responses and asked additional questions. In some cases we requested samples of documents they had forgotten to include in the initial submittals.

Comparing operations revealed a wide disparity in how the entities created, transmitted, and produced their documents in concert with their vendor partners.

The entities had different objectives and business models. Some companies billed most of their customers a flat rate every month. Another charged their customers according to their monthly usage.

Our Advice: Change Processes - Don’t Merge

After extensive research, PMC recommended our client not consolidate document operations. Though production economies would have provided economic benefits, particularly for the smaller companies, the work required to merge all the document production processes would have been extensive. The breakeven point was years away.

One benefit most organizations seek from combining document operations is postage savings generated by greater presort densities. Here, the operations were geographically dispersed. The companies would not lower their overall postage at all by co-mingling their mail.

Some entities we researched relied heavily on support and services from their print/mail vendors. Others took a more hands-on approach.

​Also a factor was the risk accompanying consolidation. Local control and knowledge would have been diluted, opening the door to data and document errors that could erase the productivity savings - besides exposing mistakes to their customers.

Had the parent organization been willing to consolidate other aspects of the operations such as standardizing on common billing and marketing platforms, combining the document operations may have made sense. In absence of a much larger business consolidation strategy, maintaining the independently managed document operations was the right solution.

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Huge Benefit to Bringing in PMC

Our research identified several opportunities for improvements and cost savings within each of the entities. After delivering our report we facilitated regular meetings among the entities, allowing them to adopt best practices across the enterprise. One entity, for example, had successfully transitioned many customers from paper to electronic bills. Another entity with less than a 5% paperless adoption rate used tactics learned through this project to boost their performance in this area.

In another case, an entity was generating 150,000 paper bills per month for customers on fixed rate plans. Another company sold a similar product and created almost no such bills. Strategies learned from their counterparts could save the first entity $1.6 million a year on document production and postage.

The PMC report of findings detailed the current state for customer communications at each of the entities, broke down the costs, and documented the different mail pieces each company produced. We recommended changes at each entity to lower costs, improve customer communication, or facilitate progress towards company goals.

We estimated our combined suggestions could generate about $3 million per year in combined cost savings and increased revenue opportunities.

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HERE ARE A FEW OF THE IDEAS WE PROPOSED

Standardize on double-window outbound and remittance envelopes instead of ordering small quantities of custom single-window envelopes for each application.

Convert to plain paper stock and eliminate pre-printed shells.

Negotiate with print/mail vendors. In one case, an entity received no postage discounts at all. In another, they were being over-charged for residual pieces.

For one company we recommended re-arranging bill cycles to batch the work by customer geographic location, improving presort density. We estimated the annual postage savings from our recommended postage strategy measures at $176,000.

Redesign documents to reduce the average page count from 1.5 pages per document to 1.0 pages. Estimated annual savings in paper and processing - $715,000.

Replace OMR inserting marks with 2D barcodes, freeing up space on the documents and improving mailpiece integrity and tracking capabilities.

Replace an aging billing system that did not match the organization’s business model. Maintenance was expensive for the legacy software. A single change to add a printable data field cost $30,000.

Sell advertising space on the bills to selected relevant businesses, generating an estimated $258,000 in extra revenue for one entity.

Our client found that working with Print/Mail Consultants opened their eyes to operational improvement ideas they had not considered before. We not only answered their questions about combining document operations, we showed them how to quickly save more money than the consolidation project would have produced over the long term.